It’s one thing for Macquarie Bank to run around the world buying everything that is nailed down, but it’s another to take on perhaps the three most powerful local vested interest groups. MacBank seems to be having more trouble with its own backyard than with Ontario tollways or Polish ports.
MacBank took on Westfield over building a major shopping centre at Sydney Airport and has had to beat a tactical retreat, downsizing its mega mall to something considerably smaller. It’s fighting Murdoch Inc. with a defo action against The Oz over a certain Tasmanian mine and seems to be running second in the PR battle. And now it’s picked a really tough opponent – the taxi industry.
The SMHhas the story of Macquarie Bank taking on Sydney taxi tsar, Reg Kermode, and his Cabcharge near-monopoly. The story includes some ominous paragraphs:
Tensions have been simmering since September last year, when Macquarie applied to the Ministry of Transport to set up a taxi network. But relations turned nasty late last month.
A source familiar with the new service says Kermode is furious about the development and has threatened to boycott taxi services to Sydney Airport, which is controlled by one of the bank’s biggest listed funds, Macquarie Airports.
The source says Kermode told Sydney Airport’s outgoing chief executive, Max Moore-Wilton, he would “fight Macquarie on the beaches over this one”…
…Meanwhile, Macquarie is still waiting for State Government approval, five months after its application.
A spokesman for the Ministry of Transport said it was usual for the process to take this long as details were clarified with the applicant.
Macquarie might have been pushing the pace by publicly announcing its new service for disabled passengers last week without that approval, but its research should have shown that it’s taking on extremely powerful vested interests.
The taxi industry in most if not all states enjoys a closeness with both sides of politics that makes real estate developers look like amateurs. It has enabled the well-organised cab owners to be immune to the calm logic of the Productivity Commission which has been hunting the fundamentally corrupt protection of this industry by state governments for years. No government is game to take the cab owners on, even though it puts taxi customers and drivers at a disadvantage.
Taxi licences are one of the last great rackets whereby their value is protected and inflated by government-induced scarcity – like free-to-air television licences really, only a bit grubbier. The high cost of taxi plates – as much as $300,000 – means drivers have to pay a lot more than they should to the owner to rent the taxi for a shift and the passenger then has to pay more than they should to the driver. And state governments bless and nominally manage the racket for the benefit of existing plate owners and the disadvantage of everyone else.
The Macquarie initiative has an excellent PR advantage as it’s trying to put more wheelie-friendly taxis on the road. The vans also happen to pay a vastly lower licence fee. What might be the real problem for Cabcharge though is that Macquarie is also offering a new payments system.
Cabcharge is a ridiculously rich little business with its dockets, cards and accounts in an industry that already gets away with adding a 10% surcharge for using a credit card. Such a margin reeks of something that is well organised and doesn’t have competition. And is unlikely to welcome any.